How To Secure More Cash For Your Business: A Guide On Becoming Bankable

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Everyone wants more cash for their business. However, there are certain barriers that may stop you from accessing this cash from certain institutions. If your business is not bankable, you might have difficulty securing the necessary funds to grow and scale your business.

What Does Being Bankable Mean?

Being bankable really means having the ability to get traditional financing packages from a financial institution. This is a fancy way to say banks will want to loan your business money.

Why It’s Important to Be Bankable

It’s important to be bankable because you’ll have access to more money. Whether you’re just starting your business or decades in, you’ll realize that you need money to make money. While debt may seem scary, sometimes it’s necessary to grow your business. Loans can help you to:

Expand your business

Instead of using up all the money that your business needs to operate, you can use a loan to grow your business. You can pay to do more advertising, market your business better or invest in your client/customer relationships. You’ll know what your business needs to expand; a loan is simply a vehicle for that change.

Purchase goods

If your small business sells goods, then you know how hard it can be to keep up with inventory. You want to keep up with demand but don’t want to hurt your cash flow. You may want to offer a variety but doing so requires investing in these products before you start selling them. For some business owners, this causes a strain on their finances, and a loan can offset the cost.

Keep the Lights On In Your Business

Cash flow is important in a business, whether you may be dealing with unpaid invoices or have products that haven’t been sold yet. You’ll need the money from invoices and the sale of the products to do other things in your business, like taking care of your operational costs. Sometimes, you’ll need a loan to keep the lights on in your business.

Have the Best Technology

If your business requires the use of equipment, you know how expensive it can be. If you want to have the best technology but can’t afford it, a loan can help you with that. A loan can be your best friend even if you’re not concerned about the best technology and just want a piece of equipment that simply gets its job done.

How to Become Bankable

Becoming bankable isn’t something that will happen overnight. Even if you don’t see a need for a loan in your business now, working on being bankable will save you so much time if you’ll ever need a loan in the future. Here are some ways to become bankable:

1. Have a Great Business Plan

Yes, the quality of your business plan affects your chances of getting a loan. Your business plan needs to clearly outline what your business is about, how you’re going to make money, financial projections, and a summary of your market and products.

If you don’t have a solid business plan, don’t worry, you can get our Roadmap to Business Success Template. This product will help you brainstorm and properly flesh out your business plan to become bankable and access the funds you need.

2. Be in a Specific Industry

Some industries have a harder time accessing loans than others. According to Cayenne Consulting, food service, retail, consulting, work-at-home, and telemarketing businesses are usually avoided by lenders. That’s not to say you will never get a loan, but it will take a little more work to find the right financial institution to do it.

3. Make Sure You Have The Necessary Paperwork In Order

If you need money from a financial institution, you’ll need to have your paperwork in order. Disorganization is a red flag for lenders. You’ll need up-to-date and accurate financial records, which include tax information. Bookkeeping is very important if you want access to money.

If you are just starting your business or ready to establish it, check out our checklist for establishing your business in the United States.

In addition to that, you’ll be better able to see your finances better if you’re organized. You’ll need to track and account for all your financial transactions. While you can use pen and paper, it’s better to just invest in accounting software like Quickbooks. Quickbooks makes organization so much easier and saves you time.

4. Make Sure Both Your Personal and Business Finances Are In Order

Lenders look at both your personal finances and your business finances. There are many reasons why you may end up with a low credit score, but this could seriously hurt your chances of getting much-needed money. It’s recommended that as a small business, you’ll need a credit score of 700 and above.

We suggest seeking financial advice if you need your credit score to be higher. However, we can suggest accessing a smaller loan that you qualify for and will have no problems paying. This will help you look like a reliable payer.

Don’t forget to refrain from commingling personal finances with business finances, so you’ll need them in different bank accounts.

5. Establish A Relationship With a Financial Institution

You’re way more likely to get a loan from a bank or financial institution that you already have a relationship. If you’re a person of color, it would be wise to find out as soon as possible the institutions that will lend to you so you don’t waste time trying to establish a relationship with those who won’t.

Establishing a relationship will help the bank understand your business, its needs, trends, and your credibility.

6. Get The Opinions of Experts

Whether this is your accountant or your mentor over at SCORE, get advice before getting the loan. Business News Daily says, “When you apply for a business loan, lenders want to see that you’ve sought guidance from knowledgeable advisors.”

7. Have Good Cash Flow

Lenders aren’t really interested in businesses that don’t have good cash flow. Cash flow can be defined as “the total amount of money being transferred into and out of a business, especially as affecting liquidity.” They just want to know you’ll have the money to pay them back; cash flow is one indication of that.

If you’re having problems with cash flow, Investopedia offers great solutions such as increasing your prices, sending out invoices regularly, offering discounts for early payments, and accepting electronic payments.

Conclusion

As you can see, becoming bankable may be something you work on over a period of time. We suggest starting before you need the loan so that you’ll avoid delays by the time you need it. Remember, you can also explore other finance options, such as grants. You can also start learning how to scale your business.

We also have a recommendation for small business financing. We recommend Bank Breezy. Bank Breezy allows small businesses to access quick, same-day approval for financing up to $25,000. You only need a 450 credit score to access this opportunity. All industries are welcome, and you take care of your application online! We hope you’ll take advantage of this opportunity and get the cash your business needs to flourish.